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Risk Management Activities and Derivative Transactions Risk Management Activities and Derivative Transactions (Tables)
 12 Months Ended
Sep. 30, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Summary of Derivative Instruments That Receive Hedge Accounting Treatment
The following tables summarize the accounting treatment that certain of TVA's financial derivative transactions receive.
Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 1) 
 
 
 
 
 
 
Amount of Mark-to-Market(1) 
Gain (Loss) Recognized in Other Comprehensive Income (Loss)(2)
Years Ended September 30
Derivatives in Cash Flow Hedging Relationship
 
Objective of Hedge Transaction
 
Accounting for Derivative
Hedging Instrument
 
2013
 
2012
Currency swaps
 
To protect against changes in cash flows caused by changes in foreign currency exchange rates (exchange rate risk)
 
Cumulative unrealized gains and losses are recorded in OCI and reclassified to interest expense to the extent they are offset by cumulative gains and losses on the hedged transaction
 
$
78

 
$
99


Notes
(1) Mark-to-market ("MtM")
(2) Other comprehensive income (loss) ("OCI")

Summary of Derivative Instruments That Receive Hedge Accounting Treatment (part 2) 
 
 
Amount of Gain (Loss) Reclassified from
OCI to Interest Expense
Years Ended September 30
Derivatives in Cash Flow Hedging Relationship
 
2013
 
2012
Currency swaps
 
$
(1
)
 
$
(35
)

Note
There were no ineffective portions or amounts excluded from effectiveness testing for any of the periods presented.
Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment





 
Amount of Gain
(Loss) Recognized in Income on Derivatives
Years Ended September 30
Derivative Type
 
Objective of Derivative
 
Accounting for Derivative Instrument
 
2013
 
2012
Interest rate swaps
 
To fix short-term debt variable rate to a fixed rate (interest rate risk)
 
MtM gains and losses are recorded as regulatory assets or liabilities until settlement, at which time the gains/losses are recognized in gain/loss on derivative contracts.
 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Commodity contract derivatives
 
To protect against fluctuations in market prices of purchased coal or natural gas  (price risk)
 
MtM gains and losses are recorded as regulatory assets or liabilities. Realized gains and losses due to contract settlements are recognized in fuel expense as incurred.

 
(11
)
 
(22
)
 
 
 
 
 
 
 
 
 
Commodity derivatives
under FTP
 
To protect against fluctuations in market prices of purchased commodities (price risk)
 
MtM gains and losses are recorded as regulatory assets or liabilities. Realized gains and losses are recognized in fuel expense or purchased power expense when the related commodity is used in production.
 
(126
)
 
(342
)
Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment
Summary of Derivative Instruments That Do Not Receive Hedge Accounting Treatment





 
Amount of Gain
(Loss) Recognized in Income on Derivatives
Years Ended September 30
Derivative Type
 
Objective of Derivative
 
Accounting for Derivative Instrument
 
2013
 
2012
Interest rate swaps
 
To fix short-term debt variable rate to a fixed rate (interest rate risk)
 
MtM gains and losses are recorded as regulatory assets or liabilities until settlement, at which time the gains/losses are recognized in gain/loss on derivative contracts.
 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
Commodity contract derivatives
 
To protect against fluctuations in market prices of purchased coal or natural gas  (price risk)
 
MtM gains and losses are recorded as regulatory assets or liabilities. Realized gains and losses due to contract settlements are recognized in fuel expense as incurred.

 
(11
)
 
(22
)
 
 
 
 
 
 
 
 
 
Commodity derivatives
under FTP
 
To protect against fluctuations in market prices of purchased commodities (price risk)
 
MtM gains and losses are recorded as regulatory assets or liabilities. Realized gains and losses are recognized in fuel expense or purchased power expense when the related commodity is used in production.
 
(126
)
 
(342
)


Note
All of TVA's derivative instruments that do not receive hedge accounting treatment have unrealized gains (losses) that would otherwise be recognized in income but
instead are deferred as regulatory assets and liabilities. As such, there was no related gain (loss) recognized in income for these unrealized gains (losses) for the
years ended 2013 and 2012.
Mark-to-Market Value of TVA Derivatives
Mark-to-Market Values of TVA Derivatives
At September 30
 
2013
 
2012
Derivatives that Receive Hedge Accounting Treatment:
 
Balance
 
Balance Sheet Presentation
 
Balance
 
Balance Sheet Presentation
Currency swaps
 
 
 
 
 
 
 
£200 million Sterling
$
(15
)
 
Other long-term liabilities
 
$
(23
)
 
Other long-term liabilities
£250 million Sterling
51

 
Other long-term assets
 
21

 
Other long-term assets
£150 million Sterling
10

 
Other long-term assets
 
(31
)
 
Other long-term liabilities
 
 
 
 
 
 
 
 
Derivatives that Do Not Receive Hedge Accounting Treatment:
 
Balance
 
Balance Sheet Presentation
 
Balance
 
Balance Sheet Presentation
Interest rate swaps
 
 
 
 
 
 
 
$1.0 billion notional
(886
)
 
Other long-term liabilities
 
(1,247
)
 
Other long-term liabilities
$476 million notional
(300
)
 
Other long-term liabilities
 
(458
)
 
Other long-term liabilities
$42 million notional
(13
)
 
Other long-term liabilities
 
(18
)
 
Other long-term liabilities
Commodity contract derivatives
(141
)
 
Other long-term assets $1; Other current assets $2; Other long-term liabilities $(35); Accounts payable and accrued liabilities $(109)
 
(267
)
 
Other long-term assets $107; Other current assets $12; Other long-term liabilities $(205); Accounts payable and accrued liabilities $(181)
FTP
 
 
 
 
 
 
 
Margin cash account(1)
11

 
Other current assets
 
43

 
Other current assets
Derivatives under FTP(2)
(166
)
 
Other current assets $(97); Other long-term liabilities $(36); Accounts payable and accrued liabilities $(33)
 
(228
)
 
Other long-term assets $2; Other current assets $(104); Other long-term liabilities $(59); Accounts payable and accrued liabilities $(67)

Notes
(1)  In accordance with certain credit terms, TVA uses leverage to trade financial instruments under the FTP.  Therefore, the margin cash account balance does not represent 100 percent of the net market value of the derivative positions outstanding as shown in the Derivatives Under Financial Trading Program table.
(2)  The September 30, 2013, and September 30, 2012 balances in the Derivatives Under Financial Trading Program table show all open derivative positions in the FTP. 
Currency Swaps Outstanding
TVA had the following currency swaps outstanding at September 30, 2013:

Currency Swaps Outstanding
At September 30, 2013
Effective Date of Currency Swap Contract
 
Associated TVA Bond Issues Currency Exposure
 
Expiration Date of Swap
 
Overall Effective
Cost to TVA
1999
 
£200 million
 
2021
 
5.81%
2001
 
£250 million
 
2032
 
6.59%
2003
 
£150 million
 
2043
 
4.96%
Commodity Contract Derivatives
Commodity Contract Derivatives 
At September 30
 
2013
 
2012
 
Number of Contracts
 
Notional Amount
 
Fair Value (MtM)
 
Number of Contracts
 
Notional Amount
 
Fair Value (MtM)
Coal contract derivatives
19
 
43 million tons
 
$
(140
)
 
23
 
46 million tons
 
$
(267
)
Natural gas contract derivatives
13
 
39 million mmBtu
 
$
(1
)
 
25
 
51 million mmBtu
 
$
—
Derivatives Under Financial Trading Program
Derivatives Under Financial Trading Program
 
At September 30, 2013
 
At September 30, 2012
 
Notional Amount
 
Fair Value (MtM)
(in millions)
 
Notional Amount
 
Fair Value (MtM)
(in millions)
Natural gas (in mmBtu)
 
 
 
 
 
 
 
Futures contracts
—

 
$
—

 
—

 
$
—

Swap contracts
152,922,500

 
(169
)
 
294,462,500

 
(232
)
Option contracts
—

 
—

 
—

 
—

Natural gas financial positions
152,922,500

 
$
(169
)
 
294,462,500

 
$
(232
)
 
 
 
 
 
 
 
 
Fuel oil/crude oil (in barrels)
 
 
 

 
 

 
 

Futures contracts
—

 
$
—

 
—

 
$
—

Swap contracts
1,205,000

 
3

 
1,390,000

 
4

Option contracts
—

 
—

 
—

 
—

Fuel oil/crude oil financial positions
1,205,000

 
$
3

 
1,390,000

 
$
4

 
 
 
 
 
 
 
 

Note
Due to the right of setoff and method of settlement, TVA elects to record commodity derivatives under the FTP based on its net commodity position with the broker or other counterparty.  Notional amounts disclosed represent the net absolute value of contractual amounts.
FTP Unrealized Gains (Losses)
Financial Trading Program Unrealized Gains (Losses)
At September 30
 
 
 
 
 
FTP unrealized gains (losses) deferred as regulatory liabilities (assets)
 
2013
 
2012
 
 
 
 
 
Natural gas
 
$
(169
)
 
$
(232
)
Fuel oil/crude oil
 
3

 
4

Coal
 
—

 
—
FTP Realized Gains (Losses)
Financial Trading Program Realized Gains (Losses)
Years Ended September 30
 
 
 
 
 
Decrease (increase) in fuel expense
 
2013
 
2012
 
 
 
 
 
Natural gas
 
$
(78
)
 
$
(116
)
Fuel oil/crude oil
 
4

 
10

Coal
 
(1
)
 
—


Financial Trading Program Realized Gains (Losses)
Years Ended September 30
 
 
 
 
 
Decrease (increase) in purchased power expense
 
2013
 
2012
 
 
 
 
 
Natural gas
 
$
(51
)
 
$
(236
)